Retirement Security Most Households Approaching Retirement Have Low Savings

United States Government Accountability Office
Report to the Ranking Member,

Subcommittee on Primary Health and
Retirement Security, Committee on
Health, Education, Labor, and Pensions,
U.S. Senate
May 2015
RETIREMENT
SECURITY
Most Households
Approaching
Retirement Have Low
Savings
GAO-15-419
May 2015
RETIREMENT SECURITY
Most Households Approaching Retirement Have Low
Savings
Highlights of GAO-15-419, a report to the
Ranking Member, Subcommittee on Primary
Health and Retirement Security, Committee on
Health, Education, Labor, and Pensions,
United States Senate
Why GAO Did This Study What GAO Found

As baby boomers move into Many retirees and workers approaching retirement have limited financial
retirement each year, the Census resources. About half of households age 55 and older have no retirement
Bureau projects that the age 65-and- savings (such as in a 401(k) plan or an IRA). According to GAO’s analysis of
older population will grow over 50 the 2013 Survey of Consumer Finances, many older households without
percent between 2015 and 2030. retirement savings have few other resources, such as a defined benefit (DB)
Several issues call attention to the plan or nonretirement savings, to draw on in retirement (see figure below).
retirement security of this sizeable For example, among households age 55 and older, about 29 percent have
population, including a shift in neither retirement savings nor a DB plan, which typically provides a monthly
private-sector pension coverage from payment for life. Households that have retirement savings generally have
defined benefit plans to defined
other resources to draw on, such as non-retirement savings and DB plans.
contribution plans, longer life
Among those with some retirement savings, the median amount of those
expectancies, and uncertainty about
Social Security’s long-term financial savings is about $104,000 for households age 55-64 and $148,000 for
condition. In light of these households age 65-74, equivalent to an inflation-protected annuity of $310
developments, GAO was asked to and $649 per month, respectively. Social Security provides most of the
review the financial status of workers income for about half of households age 65 and older.
approaching retirement and of Select Resources for All Households Age 55 and Older
current retirees.
GAO examined 1) the financial
resources of workers approaching
retirement and retirees and 2) the
evidence that studies and surveys
provide about retirement security for
workers and retirees. To conduct this
work, GAO analyzed household
financial data, including retirement
savings and income, from the
Federal Reserve’s 2013 Survey of
Consumer Finances, reviewed
academic studies of retirement Studies and surveys GAO reviewed provide mixed evidence about the
savings adequacy, analyzed adequacy of retirement savings. Studies range widely in their conclusions
retirement-related questions from about the degree to which Americans are likely to maintain their pre-
surveys, and interviewed retirement retirement standard of living in retirement, largely because of different
experts about retirement readiness. assumptions about how much income this goal requires. The studies
GAO found the data to be reliable for generally found about one-third to two-thirds of workers are at risk of falling
the purposes used in this report. short of this target. In surveys, compared to current retirees, workers age 55
GAO received technical comments and older expect to retire later and a higher percentage plan to work during
on a draft of this report from the retirement. However, one survey found that about half of retirees said they
Department of Labor and retired earlier than planned due to health problems, changes at their
incorporated them as appropriate. workplace, or other factors, suggesting that many workers may be
overestimating their future retirement income and savings. Surveys have also
found that people age 55-64 are less confident about their finances in
retirement than those who are age 65 or older.
View GAO-15-419. For more information,
contact Charles A. Jeszeck at (202) 512-7215
or jeszeckc@gao.gov.
United States Government Accountability Office

Contents
Letter 1
Background 3
About Half of Older Households Have No Retirement Savings,
and Many Rely on Social Security 7
Studies and Surveys Provide Mixed Evidence on the Adequacy of
Retirement Savings among Workers and Retirees 22
Agency Comments 36
Appendix I Objectives, Scope, and Methodology 37
Appendix II List of Selected Studies of Retirement Income Adequacy 44
Appendix III GAO Contact and Staff Acknowledgments 45
Related GAO Products 46
Tables
Table 1: Select Resources for Households Age 55-64 by
Ownership of Retirement Savings 10
Table 2: Distribution of Retirement Savings Amounts among
Households with Some Retirement Savings, Age 55-64 12
Table 3: Select Retirement Resources for Households Age 55-64
by Income Quintile 12
Table 4: Select Resources for Households Age 65-74 by
Ownership of Retirement Savings 14
Table 5: Distribution of Retirement Savings Amounts among
Households with Some Retirement Savings, Age 65-74 15
Table 6: Select Retirement Resources for Households Age 65 to
74 by Income Quintile 16
Table 7: Selected Studies of Retirement Income Adequacy 25
Figures
Figure 1: Select Resources for All Households Age 55 and Older 8
Page i GAO-15-419 Retirement Savings

Figure 2: Distribution of Retirement Savings Amounts among
Households Age 55-64 9
Figure 3: Average Composition of Income for Households Age 65-
74 by Retirement Savings Status 18
Figure 4: Average Composition of Income for Households Age 75
and Older 20
Figure 5: When Older Workers Plan to Retire Versus When
Retirees Actually Retired 31
Figure 6: Comparison of Retirement Plans of Older Workers and
How Retirees Left Their Jobs 33
Abbreviations
DB Defined benefit
DC Defined contribution
EBRI Employee Benefit Research Institute
Federal Reserve Board of Governors of the Federal Reserve System
HRS Health and Retirement Study
ICI Investment Company Institute
IRA Individual retirement account
NRRI National Retirement Risk Index
OASI Old-Age and Survivors Insurance
PBGC Pension Benefit Guaranty Corporation
SCF Survey of Consumer Finances
SSA Social Security Administration
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Page ii GAO-15-419 Retirement Savings

Letter
441 G St. N.W.

Washington, DC 20548
May 12, 2015
The Honorable Bernard Sanders

Ranking Member
Subcommittee on Primary Health
and Retirement Security
Committee on Health, Education, Labor, and Pensions
United States Senate
Dear Senator Sanders:
Baby boomers, the youngest of whom are now in their 50s, are
approaching and reaching retirement in waves. 1 According to the Census
Bureau, the age 65-and-over population in 2030 is projected to be about
74 million – more than 50 percent larger than in 2015, and representing
more than 20 percent of the projected total U.S. population. 2 Several
issues call attention to the retirement security of this sizeable First, the
decades-long shift in the private sector away from defined benefit (DB)
plans (which typically pay lifetime annuity benefits in retirement) to
defined contribution (DC) plans (which require workers to accumulate
savings over their careers and manage withdrawals in retirement) means
that many workers and retirees need more savings to provide a secure
retirement. In 1991, private-sector DB plans had more participants than
DC plans. Since then, the number of private-sector DB plans has shrunk
considerably and the number of participants has remained flat, while the
number of participants in DC plans has expanded considerably. 3 Longer
life expectancy means that many baby boomers will spend more years in
retirement than earlier cohorts and need their savings to last longer. In
addition, concerns about the long-term financial condition of Social
Security, which provides the base of financial support for retirees,
highlight the growing importance of Americans accumulating savings for
their retirement.
1
Baby boomers include the 78 million Americans born from 1946 through 1964.
2
U.S. Census Bureau, “Projections of the Population by Sex and Selected Age Groups for
the United States: 2015 to 2060.” (NP2014-T3), December 2014.
3
U.S. Department of Labor, Employee Benefits Security Administration, “Private Pension
Plan Bulletin Historical Tables and Graphs.” December 2014.
Page 1 GAO-15-419 Retirement Savings

In light of these developments, you asked us to review the financial status
of workers approaching retirement and current retirees. We examined the
following questions: 1) What financial resources do workers approaching
retirement and current retirees have? and 2) What evidence do studies
and surveys provide about retirement security for workers and retirees?
To describe the financial resources of current and future retirees, we

examined financial information from the 2013 Survey of Consumer
Finances (SCF). Conducted by the Board of Governors of the Federal
Reserve System (Federal Reserve), the SCF is a triennial national survey
of assets and income. Throughout the report, we use the term “retirement
savings” to mean money accrued in account-based DC plans, such as
401(k) plans, and individual retirement accounts (IRAs). We do not
estimate the value of DB plans or include such an estimate in retirement
savings. 4 Savings held outside of retirement accounts are included in
financial assets as non-retirement savings.
To analyze other evidence of retirement security, we reviewed several

studies of retirement adequacy and compared and contrasted their
methodologies and findings. These included academic studies based on
formal models of optimal saving behavior and consumption patterns,
studies that projected savings levels in retirement based on recent
savings data, and other reports examining the levels, adequacy, and
sources of retirement wealth. In addition, we interviewed authors of
studies and other retirement experts about retirement readiness. We also
reviewed relevant questions from surveys of retirees and workers
approaching retirement age to infer information about their experiences of
saving for and living in retirement. These questions included those
regarding financial well-being, confidence in being able to afford a
comfortable retirement, and expectations of when and how people plan to
retire. The surveys included the University of Michigan’s Health and
Retirement Study (HRS), the Federal Reserve’s Survey of Household
Economics and Decisionmaking, the Employee Benefit Research
Institute’s Retirement Confidence Survey, and other surveys.
For SCF, HRS, and other survey data used in this report, we reviewed
methodological documentation and, when appropriate, interviewed
4
While we do include DB plan benefits in retirement income, we include them in
retirement savings only if a household has taken the benefit as a lump sum and rolled it
into an IRA or other account balance.

individuals knowledgeable about the data and conducted electronic
testing. Based on this, we found the data to be reliable for the purposes
used in this report.
For the purpose of this report, we discuss households and workers

nearing retirement age, from age 55-64, to isolate near retirees and
determine retirement readiness, though some of this group may in fact be
retired. We discuss the age group 65-74 to examine retirees in the first
stage of retirement, although some members of this group may not be
retired. Finally, we discuss the age group 75 and older, most of whom we
expect to be retired. (A more detailed description of our scope and
methodology is provided in appendix I.)
We conducted this performance audit from April, 2014 to May, 2015 in

accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe that
the evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objectives.
Income in retirement may come from several sources, including (1) Social
Background Security, (2) payments from employment-based DB plans, (3) savings in
retirement plans, such as in a 401(k) plan or IRA, including the return on
these savings; 5 and (4) other sources, including non-retirement savings,
home equity, and wages.
(1) Social Security: Social Security pays benefits to retirees, their

spouses, and their survivors, as well as to some disabled workers.
According to the Social Security Administration (SSA), as of 2012, 86
percent of households age 65 and older received Social Security benefits.
Benefits are paid to workers who meet requirements for the time they
have worked in “covered employment” – jobs through which workers pay
Social Security taxes, which cover about 96 percent of U.S. workers,
5
Income in retirement may also come from earnings or returns on assets from non-
retirement accounts, but for the purposes of this report we focus on retirement savings.

according to SSA. 6 Workers can claim benefits starting at age 62 (or
when they become disabled), but for retiring workers the monthly benefit
they receive increases the longer they delay receiving them, up until age
70. 7 Monthly Social Security benefits are based on a worker’s earnings
history and are progressive, meaning that Social Security replaces a
higher percentage of earnings for lower-income workers and their
dependents than for higher-income workers.
Social Security benefits offer two main advantages: they are a monthly
stream of payments that continue until death and they adjust annually for
cost-of-living increases. According to the 2014 report from the Social
Security Board of Trustees, the Old-Age and Survivors Insurance (OASI)
trust fund from which Social Security benefits are paid is projected to
become depleted in 2034, at which point continuing income is projected
to be sufficient to cover just 75 percent of scheduled benefits. 8 This
projection raises the possibility of changes to Social Security benefits,
taxation, or both before the depletion date.
(2) Defined Benefit Plans: these plans are “traditional” employment-based

pension plans that offer benefits typically determined by a formula based
on factors specified by the plan, such as salary and years of service. DB
plans typically offer pension benefits in the form of an annuity that
provides a monthly payment for life, although some plans also offer a
lump-sum distribution option. An annuity can help to protect a retiree
against risks, including the risk of outliving one’s assets (longevity risk),
and may also offer survivor benefits. However, DB plans carry the risk
that a plan sponsor may freeze or terminate the plan. If a private-sector
plan terminates with insufficient assets to pay promised benefits, the
Pension Benefit Guaranty Corporation (PBGC), a federal government
corporation, provides plan insurance and pays promised benefits subject
6
About one-fourth of public employees do not pay Social Security taxes on the earnings
from their government jobs and receive no service credit. Starting in 1984, individuals who
began working for the federal government pay Social Security taxes and receive service
credit.
7
Individuals with disabilities who qualify for Social Security Disability Insurance receive
unreduced benefits even if they claim prior to their full retirement age.
8
The 2014 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors
Insurance and Federal Disability Insurance Trust Funds (Washington D.C.: Jul. 2014)

to certain statutory limits, which may result in some beneficiaries getting
reduced benefits.
(3) Retirement Savings: Introduced over 30 years ago, two primary types
of retirement savings vehicles currently exist: employment-sponsored DC
plans (such as 401(k) plans) and IRAs. For both types, benefits accrue in
the form of account balances, which grow from contributions made by
workers (and sometimes by their employers) and investment returns.
Examples of employer-sponsored DC plans include 401(k) plans, 403(b)
plans, and similar plans for which employers can offer payroll deductions,
employer contributions to employee accounts, or both. Individuals can
also save for retirement through IRAs, which allow individuals to make
contributions for retirement without participating in an employment-
sponsored plan. 9 DC plans and IRAs provide tax advantages, portability
of savings, and transparency of known account balances. However, they
also place the primary responsibility on individuals to participate in,
contribute to, and manage their accounts throughout their working
careers, and to manage their savings throughout retirement in order to
keep from running out of money.
Workers and employers who contribute to retirement savings accounts

generally receive favorable federal tax treatment, such as tax deductions
for contributions and tax-deferred or even tax-free returns on
investment. 10 These tax preferences are one of the largest tax
expenditures in the federal government. In fiscal year 2012, the estimated
9
While the vast majority of IRAs are individual accounts, the Internal Revenue Code also
provides for “individual retirement annuities,” which are annuity or endowment contracts
issued by insurance companies and meeting certain requirements. 26 U.S.C. § 408(b).
10
For 2015, individuals can contribute up to $5,500 in IRAs ($6,500 for those age 50 or
older), while the contribution limit for 401(k) plans is $18,000 ($24,000 for those age 50 or
older). Contributions to 401(k) plans and traditional IRAs are not subject to tax when made
(26 U.S.C. §§ 402(e)(3) and 219(a) and (e), respectively); distributions or withdrawals of
principal or earnings from them are subject to tax (26 U.S.C. §§ 402(a) and 408(c)(1),
respectively). Contributions to Roth IRAs are not tax-deductible, but after one has been
established for 5 years, upon reaching age 59½, an individual may make withdrawals of
principal or earnings not subject to tax. 26 U.S.C. § 408A(c) and (d).

revenue loss associated with these accounts included $51.8 billion for DC
plans and $16.2 billion for IRAs. 11
Employment-based retirement plan coverage, especially in the private

sector, has shifted from DB to DC plans. According to the Department of
Labor, as of 2012 private-sector DB plans had almost 40 million
participants, while DC plans had about 91 million. In contrast, in 1975,
about three-quarters of private-sector pension participants had DB plans,
and half of all participants in 1990 had DB plans. 12 According to Federal
Reserve data, as of the third quarter of 2014, U.S. DB plans held about
$11.2 trillion in assets, IRA assets totaled about $7.3 trillion and DC
assets accounted for about $6.2 trillion. 13 Rollovers from 401(k) plans and
other employment-sponsored plans are the predominant source of
contributions to IRAs. 14
(4) Other Sources: In addition to the three sources listed above, retirees
may also have other sources of income, such as earnings or income from
assets. Retirees may also choose to draw from home equity, for example,
by selling their home or obtaining a reverse mortgage. Another form of
income that economists also usually consider is “imputed rent”–the
market rent households living in owner-occupied housing could charge,
but forego, if they rented their house. 15 Earnings from work can also be
11
Office of Management and Budget, Fiscal Year 2014 Analytical Perspectives: Budget of
the U.S. Government (Washington, D.C.: April 10, 2013). The tax expenditure is
measured as the tax revenue that the government does not currently collect on
contributions and earnings amounts, offset by the taxes paid on plan distributions to those
who are currently receiving retirement benefits.
12
These figures may double-count individuals who have both a DB and DC plan. U.S.
Department of Labor, Employee Benefits Security Administration, “Private Pension Plan
Bulletin Historical Tables and Graphs.” December 2014.
13
These figures include assets in private-sector and public-sector pension plans. Board of
Governors of the Federal Reserve System, “Financial Accounts of the United States: Flow
of Funds, Balance Sheets, and Integrated Macroeconomic Accounts, Fourth Quarter
2014.” (Washington, D.C.: March 12, 2015.).
14
GAO, 401(K) Plans: Labor and IRS Could Improve the Rollover Process for
Participants, GAO-13-30 (Washington, D.C.: March 7, 2013).
15
Considering imputed rent income treats owner-occupied housing neutrally compared to
renter-occupied housing. For example, consider two homeowners who each live in their
homes and pay a $1,000 mortgage. If they moved into each other’s home and received
$1,000 per month rent, that $1,000 would be considered income, even though nothing has
changed about either household’s balance sheet or net expenses.

an important source of income for some households with a member age
65 or older, especially for those with a spouse younger than 62 who is not
yet eligible to receive Social Security benefits.
According to our analysis of data from the 2013 SCF, 52 percent of

About Half of Older households age 55 and older have no retirement savings in a DC plan or
Households Have No IRA, and Social Security provides most of the retirement income for about
half of households age 65 and older. 16 Among the 48 percent of
Retirement Savings, households age 55 and older with some retirement savings, the median
and Many Rely on amount is approximately $109,000 17–commensurate to an inflation-
protected annuity of $405 per month at current rates for a 65-year-old. 18
Social Security Households that have sizeable retirement savings are more likely than
households with lower saving to have other resources, including a higher
likelihood of expecting retirement income from a DB plan. Nearly 30
percent of households age 55 and older have neither retirement savings
nor a DB plan (see fig. 1). Social Security remains the largest component
of household income in retirement, making up an average of 52 percent
of household income for those age 65 and older.
16
For the SCF estimates in this report, we define household age as the age of the
household head. For purposes of data organization, the Federal Reserve considers the
household head to be the male within a mixed-sex couple and the older individual within a
single-sex couple. All percentage estimates based on the SCF have 95 percent
confidence intervals of within 3 percentage points of the estimate, and all dollar estimates
have confidence intervals within 5 percent of the estimate itself.
17
We are 95 percent confident that the median retirement savings amount among those
with savings is between $96,889 and $121,911.
18
We calculated an inflation-protected single-life annuity equivalent for a 65-year-old
commencing payments immediately using the Retirement Income Calculator from the
Federal Thrift Savings Plan website (www.tsp.gov), which assumed an interest rate of 2
percent as of the calculation date. In 2011, we found that few retiring workers with DC
plans chose or purchased an annuity. See GAO, Retirement Income: Ensuring Income
throughout Retirement Requires Difficult Choices, GAO-11-400 (Washington, D.C.: June
7, 2011).

Figure 1: Select Resources for All Households Age 55 and Older
Note: For households with no DB plan or retirement savings, we are 95 percent confident that the
median financial asset value was between $763 and $1,237, the median annual income was between
$17,809 and $20,055, and the median net worth was between $25,227 and $44,293. All other
estimates in this figure have confidence intervals within +/- 3 percentage points.
Over Half of Households About 55 percent of households age 55-64 have less than $25,000 in
Age 55 to 64 Have Little or retirement savings, including 41 percent who have zero (see fig. 2 for
additional detail). Most of the households in this age group have some
No Retirement Savings,
other resources or benefits from a DB plan, but 27 percent of this age
and Many of These Have group have neither retirement savings nor a DB plan.
Few Other Financial
Resources

Figure 2: Distribution of Retirement Savings Amounts among Households Age 55-
64
Note: Savings amounts are expressed in 2013 dollars. The sum of the percentages of households
with more than zero but less than $50,000 may not add up to 20 percent because of rounding. All
estimates in this figure have 95 percent confidence intervals within +/- 3 percentage points.
Four in Ten Households Age Among households age 55-64, the 41 percent with no retirement savings
55-64 Have No Retirement have few other financial resources but they are less likely to have debt
Savings and Few Other than those with retirement savings. 19 For example, around 85 percent
Resources have less than $25,000 in total financial assets, such as in savings
accounts or non-retirement investments. Compared to those with
retirement savings, these households have about a third of the median
income, about one-fifteenth of the median net worth, and are less likely to
be covered by a DB plan (see table 1). Regarding debt, households
without retirement savings are less likely to have debt than households
with savings (about 70 percent compared to 84 percent). Their debt levels
are comparable, though, as about 20 percent of households from each
19
Debt includes housing debt (such as mortgages or home equity lines of credit), credit
card balances, installment loans, and other lines of credit.

category have debt amounts that are more than twice their annual
income.
Table 1: Select Resources for Households Age 55-64 by Ownership of Retirement

Savings
Dollar figures rounded to nearest $1,000

Households age 55-64 with Households age 55-64
no retirement savings with retirement savings
Percent of households age 55-
64 41% 59%
Median net worth $21,000 $337,000
Median non-retirement
financial resources $1,000 $25,000
Median income $26,000 $86,000
Home ownership rates 56% 87%
Percent who own a home that
is paid off 22% 27%
Percent with a defined benefit
plan 32% 45%
Source: GAO analysis of 2013 Survey of Consumer Finances data. | GAO-15-419
Note: We are 95 percent confident that median net worth for households with no retirement savings is
between $13,668 and $28,536, that median non-retirement financial resources is between $795 and
$1,205, and that median income is between $23,422 and $27,646. For households with some
retirement savings, the median net worth is between $284,813 and $389,599, the median non-
retirement financial resources is between $19,672 and $29,928, and the median income is between
$81,646 and $91,230. All other estimates in this table have 95 percent confidence intervals within +/-
3 percentage points. The percent of households with DB plan includes those where the respondent
and/or the respondent’s spouse/partner has a DB plan from a current or past job.
About a Quarter of Households Perhaps of greatest concern are the 27 percent of all households age 55-
Age 55-64 Have No 64 that have neither retirement savings nor a DB plan. Their median net
Retirement Savings and No DB worth is about $9,000, 20 and 91 percent have less than $25,000 in
Plan financial assets. These households’ median home equity is about
$53,000, 21 which is less than half of what households with retirement
savings or a DB plan have.
20
We are 95 percent confident that the median net worth is between $6,469 and $12,169.
21
We are 95 percent confident that the median home equity is between $42,174 and
$63,026.

Not surprisingly, they have approximate median income of $21,000. 22
About half of these households had wage or salary income, 23 compared
to 82 percent of households age 55-64 with some retirement savings or a
DB plan. This indicates that a smaller portion of these households are
likely working, which may limit their ability to accumulate retirement
savings. About 46 percent had Social Security income, indicating that
they may have claimed before the full retirement age and would receive
reduced monthly benefits. 24
Six In Ten Households Age 55- For the 59 percent of households age 55-64 with some retirement
64 Have Some Retirement savings, we estimate that the median amount saved is about $104,000, 25
Savings which is equivalent to an insured, inflation-protected annuity of $310 per
month for a 60-year-old. 26 While about 15 percent of these households
have retirement savings amounts over $500,000, 11 percent have
retirement savings below $10,000 and 24 percent have savings of less
than $25,000 (see table 2 for additional detail). A savings amount of
$25,000 is equivalent to an insured, inflation-protected annuity of $74 per
month for a 60-year-old. 27
22
We are 95 percent confident that the median income is between $19,146 and $22,484.
23
We are 95 percent confident that between 49 and 57 percent had wage income.
24
We are 95 percent confident that between 41 and 51 percent had Social Security
income, which could include retirement, disability, survivors, or dependent’s benefits.
Eligible workers can claim Social Security retirement benefits as early as age 62, but the
monthly benefit is lower for the rest of a retiree’s life than if they delayed claiming. Full
retirement age ranges from 65 to 67, depending on birth year. 42 U.S.C. § 416(l). As we
reported in 2014, early Social Security claimers have less income and wealth in retirement
and receive a larger share of their income from Social Security than those who delay
claiming until their full retirement age. GAO, Retirement Security: Challenges for Those
Claiming Social Security Benefits Early and New Health Coverage Options, GAO-14-311
(Washington, D.C.: April 23, 2014).
25
We are 95 percent confident that the median retirement savings amount is between
$88,483 and $120,197.
26
percent as of the calculation date.
27
Ibid.

Table 2: Distribution of Retirement Savings Amounts among Households with
Some Retirement Savings, Age 55-64
10th 25th 50th 75th 90th

percentile percentile percentile percentile percentile
Retirement
Savings $8,760 $25,978 $104,340 $300,200 $718,200
Note: We are 95 percent confident that the 10th percentile amount is between $6,495 and $11,025,
the 25th percentile amount is between $19,268 and $32,688, the 50th percentile amount is between
$88,483 and $120,197, the 75th percentile amount is between $244,073 and $356,327, and the 90th
percentile amount is between $586,956 and $849,444.
Both retirement savings and DB plan coverage rises with income levels
for age 55-64 households (see table 3). 28 Across income quintiles, a
similar percentage of households have a paid-off mortgage and debt
levels above twice their income, whereas retirement savings and DB plan
coverage generally increase with income.
Table 3: Select Retirement Resources for Households Age 55-64 by Income Quintile

1 (bottom) 2 3 4 5 (top)
Percent with retirement
a
savings 9% 42% 68% 84% 94%
Among those who have,
a
median retirement savings — $19,000 $68,000 $97,000 $371,000
Percent with a defined benefit
b
plan 18% 35% 43% 53% 50%
Percent who own a home that
is paid off 21% 28% 24% 25% 29%
Percent with debt greater than
twice annual income 17% 26% 24% 21% 14%
Note: For all percentage estimates in this table, the 95 percent confidence intervals are within +/- 6
percentage points.
a
Because of sample size, we could not produce a reliable estimate for the bottom quintile. We are 95
percent confident that the median retirement savings for the 2nd quintile is between $10,334 and
$27,666, the 3rd quintile is between $49,909 and $86,171, the 4th quintile is between $73,479 and
$119,921, and the 5th quintile is between $281,513 and $460,087.
b
The percent of households with a DB plan includes those where the respondent and/or the
respondent’s spouse/partner has a DB plan from a current or past job.
28
We found SCF estimates of future income from DB plans to be unreliable for our
purposes.

Half of Households Age Turning to older households, retirement savings among those age 65-74
65-74 Have No Retirement shows a distribution similar to those age 55-64, though a larger proportion
has no retirement savings (52 percent). 29 Similar to the younger group,
Savings, and Social
about 10 percent have more than $500,000 in savings.
Security is the Largest
Source of Retirement
Income for This Age Group
About Half of Households Age
65-74 Have No Retirement
Savings Another similarity is that many households age 65-74 with no retirement
savings have few other resources to draw upon in retirement as
measured by our indicators (see table 4). Compared to those in the same
age group with retirement savings, households without retirement savings
have about one-seventh the net worth, and fewer have a DB plan. Unlike
households age 55-64, the debt profile for households without retirement
savings is not substantially better than for households with some
retirement savings.
29
We would expect most households in this age group who have retirement savings to
have begun drawing these down, although balances can still grow from contributions and
investment returns.

Table 4: Select Resources for Households Age 65-74 by Ownership of Retirement
Savings

Households age 65-74 with Households age 65-74
no retirement savings with retirement savings
Percent of households age
65-74 52% 48%
Median net worth $86,000 $597,000
Median non-retirement
financial resources $4,000 $79,000
Home ownership rates 77% 95%
Percent who own a home
that is paid off 36% 51%
Percent with a defined
benefit plan 49% 58%
Note: Percentage estimates in this table have 95 percent confidence intervals that are within +/- 5
percentage points. For households with no retirement savings, we are 95 percent confident that the
median net worth is between $70,841 and $100,675, the median non-retirement financial resources is
between $2,539 and $5,385. For households with some retirement savings, we are 95 percent
confident that the median net worth is between $483,261 and $711,607, median non-retirement
financial resources is between $61,878 and $95,922. The percent of households with a DB plan
includes those where the respondent and/or the respondent’s spouse/partner has a DB plan from a
current or past job.
A Quarter of Households Age Similar to households age 55-64, a closer look at the 27 percent of
65-74 Have No Retirement households age 65-74 with no retirement savings and no DB plan reveals
Savings and No DB Income that they have very low levels of resources to draw upon for retirement
income. This group has a median net worth of about $57,000, 30 which is
around one-sixth the net worth of other households of this age. Compared
to households with some retirement savings or a DB plan, households in
this age group generally have lower home ownership rates (about 67
percent compared to 93 percent) and less home equity when they do own
homes (median home equity is about $100,000, compared to
$148,000). 31
30
We are 95 percent confident that the median net worth is between $30,821 and
$83,789.
31
For households with neither retirement savings nor DB plans, we are 95 percent
confident that between 62 and 73 percent own a home and their median home equity is
between $81,551 and $118,449. For other households, we are 95 percent confident the
median is between $139,628 and $156,772.

Households Age 65-74 with For the 48 percent of households age 65-74 that have some retirement
Some Retirement Savings savings, we estimate that the median amount is $148,000, 32 comparable
to an insured, inflation-protected annuity of $649 per month for a 70-year-
old at current rates. 33 About one in five of these households has
retirement savings amounts over $500,000, while 16 percent have
savings less than $25,000 (see table 5 for additional detail). 34
Table 5: Distribution of Retirement Savings Amounts among Households with

Some Retirement Savings, Age 65-74
10th 25th 50th 75th 90th

percentile percentile percentile percentile percentile
Retirement
savings $16,800 $48,800 $148,000 $394,200 $1,112,400
Note: We are 95 percent confident that the 10th percentile amount is between $9,644 and $23,956,
the 25th percentile amount is between $36,999 and $60,601, the 50th percentile amount is between
$123,799 and $172,201, the 75th percentile amount is between $306,096 and $482,304, and the 90th
percentile amount is between $885,356 and $1,339,444.
About Forty Percent of For all households age 65-74, median annual income is about $47,000 35
Households Age 65-74 Get and Social Security makes up on average 44 percent of income for
Most of their Income from households in this age group, larger than any other income source. About
Social Security 90 percent of all households in this age range receive some Social
Security income, and the median amount they receive is approximately
$19,000. 36 About 41 percent of households in this age range rely on
Social Security for over half of their income, while 14 percent rely on
Social Security for more than 90 percent of their income. While Social
Security is, on average, the largest component of household income in
retirement, other sources also play a role in funding retirement for
32
We are 95 percent confident that the retirement savings amount is between $123,799
and $172,201.
33
34
We are 95 percent confident that between 13 and 20 percent of households age 65-74
with some retirement savings have less than $25,000.
35
We are 95 percent confident that median income is between $44,244 and $50,706.
36
We are 95 percent confident that the median Social Security income is between
$18,071 and $20,041.

households age 65-74. Income from work and pension-based annuities,
such as DB plans, contribute about a fifth of household income each, on
average. Distributions from retirement savings make up a relatively small
portion of average household income at 4 percent. Because Social
Security and DB plans represent a relatively large portion of retiree
income, it follows that much of the household income for this age group
has some assurance that it will last a lifetime.
Among households age 65-74, the prevalence of both retirement savings

and DB plans generally increases with income (see table 6). As with the
younger age group, not only do a larger proportion of higher-income
households have some retirement savings, but the amount they have
saved is also larger. Similarly, the annual amount they receive from their
DB plan increases with income.
Table 6: Select Retirement Resources for Households Age 65 to 74 by Income

Quintile

First (bottom) Second Third Fourth Fifth (top)
Percent with retirement
savings 9% 33% 48% 65% 84%
Among those who have,
median retirement
a
savings — — $104,000 $144,000 $468,000
Percent with a defined
b
benefit (DB) plan 19% 46% 67% 68% 65%
Among those with DB
income, median annual
c
amount $4,000 $11,000 $17,000 $24,000 $37,000
Percent who own a home
that is paid off 44% 50% 40% 44% 39%
Percent with debt greater
than twice annual income 17% 17% 27% 14% 10%
Note: For all percentage estimates in this table, the 95 percent confidence intervals are within +/- 8
percentage points.
a
Because of sample size, we could not produce a reliable estimate for the bottom two quintiles. We
are 95 percent confident that the median retirement savings for the 3rd quintile is between $66,041
and $142,359, the 4th quintile is between $114,070 and $172,730, and the 5th quintile is between
$345,986 and $590,414.
b
The percent of households with a DB plan includes those where the respondent and/or the
respondent’s spouse/partner has a DB plan from a current or past job.
c
We are 95 percent confident that the median DB income for the 1st quintile is between $2,242 and
$6,446, for the 2nd quintile is between $8,484 and $12,876, for the 3rd quintile is between $13,910
and $19,210, the 4th quintile is between $17,902 and $30,146, and the 5th quintile is between

$25,560 and $47,640. DB income includes income from DB plans and any annuitized DC plans.
Social Security makes up a larger share of household income for

households with no retirement savings, which is not surprising as these
households have lower incomes. The 52 percent of households age 65-
74 with no retirement savings rely primarily on Social Security for income
in retirement, as it makes up 57 percent of their household income on
average (see figure 3). These households have median income of
approximately $29,000, and 25 percent of them rely on Social Security for
more than 90 percent of their income. 37 Those in the same age range
who have some retirement savings have a median income of $76,000. 38
Social Security makes up on average 31 percent of income for those with
savings, about the same percentage that wage or salary income
contributes. 39 Reflecting Social Security’s progressive benefit structure,
86 percent of those in the lowest income quintile receive more than half of
their household income from Social Security, while 66 and 44 percent of
those in the second and third quintiles do, respectively. 40
37
We are 95 percent confident that the median income is between $26,132 and $32,654
and that between 21 and 28 percent relied on Social Security for more than 90 percent of
their income. The 2012 poverty threshold for a two-adult household age 65 and older was
$13,878.
38
We are 95 percent confident that the median income is between $64,594 and $87,150.
39
While wage or salary income makes up, on average, 30 percent of household income
among this population, we are 95 percent confident that between 52 and 59 percent of
these households had wage or salary income. For comparison, we are 95 percent
confident that between 27 and 35 percent of households with no retirement savings had
wage or salary income.
40
We are 95 percent confident that the figures are between 81 and 91 percent, 57 and 74
percent, and 37 and 51 percent, respectively.

Figure 3: Average Composition of Income for Households Age 65-74 by Retirement Savings Status
Note: Other includes income from non-retirement investments, such as interest, dividends, mutual
funds, stocks, and bonds. It also includes rental income, real estate, child support, alimony, and
business/farm income. Public assistance includes income from unemployment or worker’s
compensation, and programs such as Temporary Assistance for Needy Families or Supplemental
Security Income. Retirement savings distributions do not include annuity equivalents from assets
remaining in the plan. Sums may not add up to 100 because of rounding. All estimates in this figure
have 95 percent confidence intervals within +/- 3 percentage points.
Households age 65-74 with no retirement savings or DB plan have about

one-third the income of other households in the same age group and are
even more likely to rely on Social Security. Specifically, their median
income is about $19,000 compared to $60,000 for the other group. 41 Only
about a quarter of these households have wage income, compared to 49
percent of other households in this age range, while 45 percent of them
relied on Social Security for over 90 percent of their income, compared to
41
We are 95 percent confident that income for households with neither retirement savings
nor DB plan is between $16,728 and $20,684. For other households it is between $56,092
and $63,852.

3 percent for households with either some retirement savings or a DB
plan. 42
Most Households Age 75 Households age 75 and older have even fewer retirement assets than
and Older Have No younger households, and only 29 percent have retirement savings. About
35 percent have neither retirement savings nor a DB plan, though a larger
Retirement Savings and
percentage of households in this age group have a DB plan than those
Social Security Provides nearing retirement (55 percent compared to 40 percent for households
Most Household age 55-64). Of those households that have savings, the median savings
Retirement Income on is approximately $69,000, 43 which is commensurate to an insured,
Average inflation-protected annuity of $467 per month at current rates for an 80-
year-old. 44
Social Security provides the bulk (on average 61 percent) of household

income for those 75 and older (see fig. 4). The median income for
households age 75 and older is about $27,000, and the median Social
Security income is approximately $17,000. 45 When compared to younger
households age 65-74, Social Security makes up a larger share of
household income for retirees age 75 and older, with 62 percent of these
households relying on Social Security for more than 50 percent of their
income, and 22 percent relying on Social Security for more than 90
percent of their income. 46 Moreover, according to Census data, about 43
42
Among households with neither retirement savings nor a DB plan, we are 95 percent
confident that between 20 and 30 percent had wage income and that Social Security
made up more than 90 percent of income for between 39 and 50 percent of them.
43
We are 95 percent confident that the retirement savings amount is between $49,199
and $88,801.
44
We calculated an inflation-protected single-life annuity equivalent for an 80-year-old
Federal Thrift Savings Plan website (www.tsp.gov), which assumed an interest rate of two
45
We are 95 percent confident that median income is between $25,626 and $29,184
while Social Security income is between $15,617 and $17,983. About 98 percent of
households age 75 and older had income from Social Security.
46
We are 95 percent confident that between 58 and 65 percent rely on Social Security for
more than 50 percent of their income.

percent of people 65 years and older would have incomes below the
poverty level if they did not receive Social Security. 47
Figure 4: Average Composition of Income for Households Age 75 and Older
Note: Other includes income from non-retirement investments, such as interest, dividends, mutual
funds, stocks, and bonds. It also includes rental income, real estate, child support, alimony, and
business/farm income. Public assistance includes income from unemployment or worker’s
compensation, and programs such as Temporary Assistance for Needy Families or Supplemental
Security Income. Retirement savings plan distributions do not include annuity equivalents from assets
remaining in the plan. Sums may not add up to 100 because of rounding. All estimates in this figure
have 95 percent confidence intervals within +/- 3 percentage points.
As with the younger age groups, households age 75 and older with no
retirement savings have fewer resources based on our indicators than
those with some retirement savings, as one might expect. For example,
their median net worth is about $127,000, compared to $435,000 for
same-aged households with some retirement savings. 48 Additionally,
47
U.S. Bureau of the Census. Current Population Survey, Annual Social and Economic
Supplements, “Impact on Poverty of Alternative Resource Measures by Age: 1981 to
2013,” accessed March 27, 2015 from
http://www.census.gov/hhes/www/poverty/data/incpovhlth/2013/Impact_Poverty.xls.
48
We are 95 percent confident that the median net worth for households with no
retirement savings is between $107,366 and $147,194, while for other households it is
between $354,804 and $515,952.

households with no retirement savings have lower homeownership rates
than other households in the same age range (75 percent compared to 93
percent) and a smaller proportion own their homes outright (55 percent
compared to 74 percent). 49 A larger share of households in this age range
have paid off their mortgages than have younger groups.
Similarly, households age 75 and older with no retirement savings have

lower median incomes than those with some retirement savings.
Specifically, they have about half the median income as households with
some retirement savings (about $24,000, compared to $47,000). 50
Retirement savings distributions contribute, on average, about 17 percent
of household income among those with some retirement savings, adding
a median amount of $4,000 to these households’ income. 51 Households
with retirement savings in this age group obtain just under half their
income from Social Security on average (46 percent). 52
49
We are 95 percent confident that between 51 and 58 percent of households with no
retirement savings own their home with no debt, while between 70 and 79 percent of other
households do.
50
We are 95 percent confident that the median income for households with no retirement
savings is between $22,041 and $25,015, while it is between $39,833 and $53,729 for
other households.
51
This amount represents the median amount of retirement savings plan distributions
among households that had some retirement savings, regardless of whether they
withdrew from these savings accounts. We are 95 percent confident that retirement
savings distributions contribute between 13 and 21 percent of these households’ income
while the median amount is between $2,434 and $6,494.
52
We are 95 percent confident that Social Security contributes between 42 and 50
percent of these households’ income on average.

Studies and Surveys
Provide Mixed
Evidence on the
Adequacy of
Retirement Savings
among Workers and
Retirees
Studies of Retirement Economists broadly agree that a conceptual benchmark measure for
Savings and Income adequate retirement saving is an amount that will, along with other
sources of retirement income, allow a household to maintain its pre-
Adequacy Conclude
retirement standard of living into retirement. However, there is no
Different Things about consensus about how much income this standard requires. Economists
U.S. Retirement Security, and financial planners generally agree that many retirees do not need to
Largely Because of replace 100 percent of working income in order to maintain their standard
Different Savings Targets of living because most retirees probably have reduced expenses—for
example, no longer needing to provide for payroll taxes, retirement
saving, and commuting expenses—relative to when they were working.
Other big expenses that many households may face while working but not
while retired include the cost of raising children (who are likely grown and
financially independent by the parents’ retirement age) and of housing if
homeowners pay off their mortgage by retirement. Conversely, health
costs may represent a greater expense for a household in retirement than
while working.
Setting a specific target for, and even calculating, the “replacement rate”–
a household’s post-retirement income as a percentage of pre-retirement
income–required to maintain a household’s standard of living requires
many complicated assumptions. 53 There is broad agreement over some
aspects of replacement rates, at least in concept if not necessarily in
practical application to calculations. Because higher-income households
tend to pay a higher percentage of their income in taxes and save more
53
For a study of the complexity and limitations of figuring replacement rates, see
MacDonald, B-J. and K. D. Moore. 2011. “Moving Beyond the Limitations of Traditional
Replacement Rates.” Society of Actuaries. http://www.soa.org/research/research-
projects/pension/default.aspx.

for retirement while working, they generally require a lower replacement
rate in retirement when these expenses decline; for the opposite reasons,
lower-income households generally require higher replacement rates. For
these reasons, there is no single replacement rate that represents a
“success” for retirement income.
Several studies have attempted to evaluate the adequacy of retirement

income or project the likelihood of current workers having sufficient
retirement income. 54 Some of these studies attempt to judge the
retirement readiness of workers by using data on consumption, income,
and wealth for working-age households and projecting a replacement rate
at retirement; they then compare this projection to a target replacement
rate that they estimate to be enough to maintain a standard of living in
retirement. As Table 7 shows, different studies use different replacement
rate or other benchmarks for retirement income adequacy. The Center for
Retirement Research at Boston College produces a National Retirement
Risk Index (NRRI) based on data from the 2013 SCF and concluded that
52 percent of households faced risk of having insufficient retirement
income to maintain their standard of living. This percentage is almost the
same as the one calculated from the 2010 SCF and is up from 44 percent
in 2007. 55 However, at-risk percentages vary considerably by sub-group
in the NRRI. For example, Boston College calculates that 60 percent of
households with income in the lowest third of the income distribution are
at risk, and 43 percent of households in the highest-third are at risk of
having insufficient retirement income to maintain their pre-retirement
standard of living. The NRRI also finds a greater percentage of
households age 30-39 at risk than age 50-59.
The Employee Benefit Research Institute (EBRI) uses its Retirement

Security Projection Model to project the percentage of workers at risk of
having retirement income that is inadequate to cover minimum retirement
54
Some studies focus on retirement savings amounts while others speak more in terms of
retirement income. Throughout this section we assume that all forms of usable retirement
wealth can be used to finance consumption in retirement, without necessarily making
assumptions about the decision to annuitize lump-sum assets or to convert home equity to
liquid financial assets. For citations for all the studies in this section, please see app. II.
55
Boston College defines a household at risk if their projected replacement rate falls at
least 10 percent below their target replacement rate for their income group.

expenditures. 56 EBRI’s projections show about 44 percent of their sample
falling short of target retirement income. However, EBRI’s projections
show a much higher percentage of lower-income households at risk of
falling short on retirement income: 12.5 percent of those born 1948-1954
in the highest-income quartile compared to 86.8 percent of the same
cohort in the lowest-income quartile. In a 2012 study, Aon Hewitt projects
savings of its sample against a target 85 percent replacement rate and
estimates that 85 percent of workers will fail to hit this target by age 65.
Even when focusing on “full career” workers who have the potential to
contribute to a retirement account for at least 30 years, 71 percent of
these workers still are projected to fall short of the benchmark.
The 2015 National Institute on Retirement Security (NIRS), instead of

using a projection model, uses the 2013 SCF to compare net worth
among workers to financial industry-suggested savings benchmarks at
different ages. NIRS finds that approximately two-thirds of workers have
savings below the suggested benchmark, enough for an 85 percent
replacement rate target at age 67. A 2012 Urban Institute study focuses
on Baby Boom workers and retirees and sets a 75 percent replacement
rate target, but measures retirement income at age 70. Depending on
alternative assumptions they made about whether retirees annuitized
retirement assets and how they calculated pre-retirement income, they
find about 30 to 40 percent of their sample fell short of their replacement
rate target. 57
56
EBRI defines this measure as a set of expenses, varying by income, from the
Consumer Expenditure Survey, in addition to some health insurance and out-of-pocket
health expenses, plus stochastic expenses from nursing home and home health care.
57
The Urban Institute’s first method for calculating future retirement income counts
income from assets, money withdrawn from retirement accounts, and income from Social
Security, pensions, and earnings. The second assumes retirees annuitize 80 percent of all
financial assets in addition to income from Social Security, pensions, and earnings. The
second method yields results in which more retirees meet the 75 percent replacement rate
target.

Table 7: Selected Studies of Retirement Income Adequacy
Retirement adequacy benchmark

Organization (year of (replacement rate unless Percentage of sample projected
study) otherwise specified) to be below benchmark Other notes and statistics
Aon Hewitt (2012) 85%, or 11 times pay at age 65. 85% of sample, including 71% of Estimates that savings shortfall
employees with potential to relative to target for full-career
participate in employer plan for 30 contributing employee is 2.2
years. times pay.
Biggs-Schieber (2014) Able to maintain standard of living N/A For those who work to full
in retirement, but no specific target retirement age, Social Security
stated typically replaces 62 percent of
final-average earnings; income
from 401(k)’s and IRA’s
underreported by SSA.
Center for Retirement 69% for highest-third income, 72% 52% overall; 60% of low-income Projects retirement income at
Research at Boston for middle, 79%, for lowest. and 43% of high-income age 65. Assumes annuitization
College (2014) households. of wealth, including housing
equity.
Employee Benefit Sufficient to meet basic expenses, 44% of 1948-1954 birth cohorts; Assumes age-65 retirement.
Research Institute (2012) including health expenses, 87% of lowest income quartile, Assumes housing equity
throughout retirement. 13% of highest income converted to savings only when
other resources are exhausted.
Hurd-Rohwedder (2012) Enough resources to maintain pre- 30% of age 66-69-year-olds; 23% of Estimate consumption
retirement consumption and die married households, 51% of single trajectories based on pre-
with bequeathable assets persons retirement consumption.
Assumes housing wealth not
depleted until other forms of
wealth are. Lowest rates of
preparedness for people with
shortest financial planning
horizons and with least
education.
National Institute on 85%, or 8 times income at age 67 66% of working households age Estimates that 62.4% of
Retirement Security 25-64; 70% of age 55-64 households age 55-64 fall short
(2015) households. of target using a 25% lower
savings goal.
Investment Company Able to maintain standard of living N/A Declining poverty rates of 65-
Institute (2012) in retirement, but no specific target and-older population, and
stated. smaller percentage of 65-and-
older in poverty than 18-64;
Social Security and housing
equity comprise key
components for lower-wealth
workers; most 55-64 year olds
covered by some pension
wealth

Retirement adequacy benchmark
Organization (year of (replacement rate unless Percentage of sample projected
study) otherwise specified) to be below benchmark Other notes and statistics
Scholz-Seshadri- Wealth consistent with predictions 16% of households overall; 30% Sample from 1992 wave of the
Khitatrakun (2006) of lifecycle model. of lowest-income decile, 5% of Health and Retirement Study.
highest-income decile Progressive Social Security
benefits, other transfers, and
children leaving household
account for much of lower-
income savings adequacy.
Urban Institute (2012) 75% replacement rate at age 70. 30-40% of 1956-65 birth cohorts Calculates working-years
income using age 50-54 income
and 35 years highest earnings.
Source: GAO analysis of studies listed. See app. II for bibliographic information on studies. | GAO-15-419
Other studies have somewhat more optimistic conclusions about whether

American workers are likely to have enough income in retirement to
maintain their standard of living. A 2006 study by Scholz, Seshadri, and
Khitatrakun uses the Health and Retirement Study to compare individuals’
earnings and savings history against wealth predictions of a lifecycle
model over a household’s lifetime, with different targets for different
household characteristics. 58 They find that only 16 percent of households
have savings below the predictions of their model. Their findings
emphasize the impact of children and the progressive benefit structure of
Social Security, which replaces a higher percentage of income for lower-
income earners than higher-income earners, as key factors explaining
how such a high percentage of households can reach retirement income
58
A lifecycle model of saving in economics tries to explain patterns of consumption and
saving over an individual or household’s lifetime. The model generally predicts that
individuals seek to smooth consumption over their lives, leading to a prediction of
borrowing during younger years, saving during middle-age years, and living off
accumulated savings in retirement.

adequacy. 59 However, even with these factors, Scholz, Seshadri, and
Khitatrakun find that the percentage of households with adequate
retirement income declines with earnings: about 30 percent of lowest-
decile earners undersave in their estimation, compared to 5 percent of the
highest decile. A 2012 study by Hurd and Rohwedder similarly uses a
lifecycle framework that estimates consumption paths of Health and
Retirement Study households, based on consumption in the years prior to
retirement, and projects which households have enough financial
resources to maintain this consumption path until death. The studies by
Hurd and Rohwedder and Scholz, Seshadri, and Khitatrakun assume that
households value consumption later in retirement less than earlier, in part
reflecting the declining probability of being alive later in life;. This
assumption lowers consumption targets later in retirement than they
would under an assumption that households smooth their consumption
throughout retirement. Hurd and Rohwedder found that 23 percent of
married couples and 51 percent of single persons fall short of these
targets. However, they find that single households and those with less
education are more likely to be unprepared for retirement by the study’s
targets.
A 2012 study from the Investment Company Institute (ICI) and a 2014
study by Andrew Biggs and Sylvester Schieber also express doubt that
Americans are not saving adequately for retirement, although they do not
set an adequacy benchmark based on replacement rate or standard of
living targets against which to measure household savings. ICI argues
that a “five-tiered pyramid” of retirement assets, made up of Social
Security, employment-based DB and DC pensions, IRAs, housing equity,
59
In 2014, SSA published estimated replacement rates for retired worker beneficiaries
who were newly entitled in 2013. At age 65, these measured 34.6 percent for those with
indexed career-average earnings of 160 percent of the average wage index, 41.7 percent
for those with indexed career-average earnings equal to the average wage index, 56.3
percent for those with indexed career-average earnings of 45 percent of the average, and
77.4 percent for those with indexed career-average earnings of 25 percent of the average.
There has been recent debate regarding the methodology of published Social Security
replacement rate estimates, with some commentators saying the published rates
understate the replacement rate and others countering this critique. For discussion of
different measures of Social Security replacement rates, see Andrew G. Biggs and Glenn
R. Springstead, “Alternate Measures of Replacement Rates for Social Security Benefits
and Retirement Income,” Social Security Bulletin, vol. 68, no. 2, 2008; and Stephen Goss,
Michael Clingman, Alice Wade, and Karen Glenn, “Replacement Rates for Retirees: What
Makes Sense for Planning and Evaluation?” SSA, Office of the Chief Actuary, Actuarial
Note Number 155, July 2014.

and other financial assets, has successfully provided for retirees.
However, while they find that, based on 2010 data, most near-retiree
households across income groups have some assets in an employment-
sponsored plan or an IRA, they also find that the percentage of such
households rises with income: about half of households with income less
than $30,000 to about 95 percent of households with income of at least
$80,000. ICI also cites a lower percentage of 65-and-older Americans
living in poverty than the overall population as evidence of success with
the retirement system. They conclude that “on average” households are
able to maintain their standard of living in retirement.
The Biggs and Schieber study argues that reported replacement rates
published in prior Social Security Trustees reports understated the extent
to which Social Security benefits replace earnings because Social
Security uses lifetime earnings (instead of final-year earnings) and
indexes earnings to average wages instead of average prices. These
assumptions, they argue, overstate income during working years, and
thus, published estimates understate how much Social Security benefits
replace as a percentage of working income. Biggs and Schieber, like
Scholz, Seshadri, and Khitatrakun, also argue that some studies set too-
high replacement rate targets because they ignore the favorable
economic impact of children leaving the household.
Assumptions about income targets and methodology help drive the

conclusions of these different studies. Some considerations in evaluating
all of these studies include:
How income and expenses may change during retirement. One limitation
of replacement rate calculations is that they suggest a fixed amount of
retirement income and expenses. In reality, retirement income may vary
throughout retirement, depending in part on the degree to which a
household’s income is annuitized. To the extent that retirees have to
manage savings in lump-sum form, such as in an IRA or DC plan, they
face risk from investment returns and outliving their resources, among
other factors. Even annuitized income, if not adjusted for inflation, may
lose purchasing power, especially over longer retirement periods. To the
extent that Social Security makes up a significant portion of retirement
income, as we find earlier in this report, the amount and purchasing
power of income throughout retirement may be more predictable, as
would annuitized income from a DB plan or any other annuitized wealth (if
inflation adjusted). Similarly, expenses, especially health care, may be
neither steady nor predictable in retirement. Finally, for women

approaching or in retirement, becoming divorced, widowed or
unemployed can have detrimental effects on their income security. 60
How the impact of children on target income may be complicated. To the

extent that children become independent long before parents retire,
households approaching retirement may already have adjusted to higher
levels of consumption, possibly raising their standard of living and
required replacement rates. In retirement, the extent to which grown
children may remain partially dependent on retired parents also would
lessen the extent to which the cost of raising children is a foregone
expense in retirement.
How income from Social Security may change. The 2014 Social Security
Trustees; Report projects the Old-Age and Survivors Insurance Trust
Fund, which pays Social Security retirement benefits, to become insolvent
in 2034, at which point revenues are projected to be enough to cover 75
percent of scheduled benefits. 61 Should benefits fall, either because of
insolvency or because of reforms to extend the solvency of the trust fund,
this could represent a major challenge to households who rely heavily on
Social Security for retirement income. Similarly, if reforms raised payroll
taxes on workers, this could affect their ability to save for retirement.
Further, as the normal retirement age continues to rise for receiving full
benefits (gradually from 65 for beneficiaries born in 1937 or earlier to 67
for those born in 1960 or later), future Social Security replacement rates
will fall unless workers delay claiming until they are older.
60
GAO, Retirement Security: Women Still Face Challenges, GAO-12-699 (Washington,
D.C.: July 19, 2012).
61
Under the Trustees’ intermediate assumptions. The 2014 Annual Report of the Board of
Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance
Trust Funds (Washington, D.C.: July 28, 2014).

Surveys Show That Surveys indicate that workers age 55 and older generally plan to retire at
Workers Age 55 and Older an older age and work more in retirement than current retirees actually
did. 62 These plans may indicate that the current cohort of workers nearing
Approaching Retirement
retirement will in fact work longer than current retirees did. However, if
May Overestimate Their these expectations for retiring later prove unrealistic or do not come to
Ability to Earn Future fruition, workers’ retirement security may be at risk, since workers may
Income have fewer years to work and save for retirement than they are planning.
According to the 2015 Employee Benefit Research Institute’s (EBRI)

Retirement Confidence Survey, among workers 55 and older, nearly half
say they plan to retire at 66 or older, while 14 percent of current retirees
report having done so (see fig. 5). Gallup polling indicates that plans to
retire later may be associated with low confidence in retirement savings.
In a 2013 Gallup survey, baby boomers who strongly disagree with the
statement “you have enough money to do everything you want to do” plan
to retire at 73, while those who strongly agree with the statement plan to
retire at 66. 63 According to a 2013 Society of Actuaries survey, retirement
expectations also vary by household income, with workers from lower-
income households more likely to plan to retire at older ages than workers
from higher-income households. Furthermore, among pre-retirees age 45
and older, 31 percent of those making less than $50,000 a year, 14
percent of those making between $50,000 and $99,000 a year, and 7
percent of those making $100,000 or more a year do not plan to retire.
Among those who said they do not plan to retire, the dominant reason
was the expectation of never having enough money to retire (55 percent).
62
In this section, retirees refers to people who self-identify as retired, and the term is not
dependent on age, unless stated otherwise in this report.
63
Gallup defines baby boomers as people born between 1946 and 1964.

Figure 5: When Older Workers Plan to Retire Versus When Retirees Actually Retired 64
The EBRI study found that those who retired earlier than expected are
more likely than other retirees to say they are not confident about having
enough money for a comfortable retirement or paying for basic expenses,
medical expenses, and long-term care expenses. Similarly, a 2008 study
by Michael Hurd and Susan Rohwedder of RAND found that those who
said that health was an important reason for retirement were
disproportionally from the lowest wealth quartile, tended to retire earlier
than planned, and reduced consumption more than others in retirement,
indicating their standard of living may have dropped in retirement. 65
Many people retire for reasons they did not anticipate or that are out of
their control, further indicating that workers’ financial plans for retirement
may not hold and that workers may need to plan for uncertainty.
According to the 2012 Health and Retirement Study (HRS), 43 percent of
retirees report having felt forced into retirement, while the EBRI study
reported that 50 percent of retirees left the work force earlier than
planned. 66 Moreover, younger retirees are more likely to feel forced into
retirement; according to the HRS, 51 percent of retirees age 55-64 felt
forced into retirement, while 34 percent of retirees age 65-74 said the
64
Numbers do not add up to 100 because the remainder of the respondents either did not
to answer or said they did not know.
65
Michael D. Hurd and Susan Rohwedder, The Retirement Consumption Puzzle: Actual
Spending Change in Panel Data. (Cambridge, MA: National Bureau of Economic
Research, April 2008.)
66
GAO’s analysis is based on data from the 2012 Health and Retirement Study.
Confidence intervals are between 40.4 percent and 46 percent with 95 percent certainty.

same. 67 In the EBRI study, where respondents could report multiple
reasons for retiring earlier than planned, some said they did so because
they could afford to or wanted to do something else, but more cited
reasons such as health problems or disability (60 percent), changes at
their workplace (27 percent), and having to care for a spouse or another
family member (22 percent).
Other events outside a worker’s control, such as the 2007-9 recession,

may have caused workers to change their retirement plans. The
recession had disparate effects on people approaching retirement,
causing some to retire earlier than expected, likely when they could not
find employment, and others to retire later, likely because their retirement
savings balances had dropped. According to a 2013 Federal Reserve
study, 38 percent of people age 55-64 and 47 percent of people age 65-
74 who had not yet retired reported that they delayed retirement since the
recession, and 21 percent of people age 55-64 and 13 percent of people
65-74 who had retired reported retiring earlier than planned. 68
The 2013 survey sponsored by the Society of Actuaries found that current
workers age 45 and older expect similar sources of income in retirement
as current retirees are receiving, with a few key exceptions. Specifically,
in one exception, 59 percent of pre-retirees expect to receive income from
a DB plan while 73 percent of retirees receive income from a DB plan; in
another, 81 percent of pre-retirees expect income from an employment-
sponsored retirement savings plan, while 53 percent of retirees receive
this. Most notably, 57 percent of pre-retirees expect employment,
including self-employment, to constitute a source of income in retirement,
while 28 percent of retirees report having this.
The Federal Reserve survey also suggests that many workers may
unrealistically expect to continue working as long as possible or transition
to new work when they “retire”. Only 18 percent of workers approaching
retirement who have done some planning for retirement expect to stop
67
Confidence intervals for 55-64–year-olds are between 46.8 percent and 54.8 percent with
95 percent certainty. Confidence intervals for 65-74-year-olds are between 29.5 percent
and 38.1 percent with 95 percent certainty.
68
GAO’s analysis is based on data from the Federal Reserve’s 2013 Survey of Household
Economics and Decisionmaking. As with all survey data, there is an associated sampling
error.

work completely at retirement, while 59 percent of workers plan to work
as long as possible, or plan to shift jobs in retirement by finding a different
job or working for themselves. This contrasts with the experiences of
retirees, among whom 29 percent shifted jobs in retirement (see fig. 6). 69
Figure 6: Comparison of Retirement Plans of Older Workers and How Retirees Left Their Jobs 70
People Age 55-64 Are As compared to people age 55-64, many people over 65 report being
Less Confident about able to manage financially. According to a Federal Reserve survey, 72
percent of people age 65-74 and 84 percent of people 75 and older say
Their Financial Well-Being
they are managing okay or better financially, while only 59 percent of
in Retirement Than Those people age 55-64 report they are managing okay or better financially. 71
over 65
69
This includes those who retired from their previous career and then found a different
full-time or part-time job or started working for themselves.
70
Asked among workers who have done some planning for retirement. Retirees were able
to report multiple responses for this question.
71
Age groups refer to everyone in that age group, retired and working, unless stated
otherwise.

While most people 65 and over have confidence in their retirement
security, levels of confidence among people approaching retirement age
are lower. According to an older EBRI survey, conducted in 2014, 69
percent of retirees say that their experience in retirement with respect to
their finances has been about the same or better than they expected it to
be. According to the 2013 Survey of Consumer Finances, two-thirds of
households age 65-74 say their received or expected retirement income
is at least enough to maintain living standards (66 percent). On the other
hand, just over half (52 percent) of people age 55-64 say retirement
income they expect or receive will be enough to maintain living
standards. 72
However, confidence in affording certain types of expenses in retirement

varies, suggesting that expenses such as for long-term care may be a
cause of concern for retiree financial security. According to the EBRI
study, 82 percent of retirees are very or somewhat confident they will
have enough money to take care of basic expenses in retirement, 78
percent are very or somewhat confident they will have enough to take
care of medical expenses during retirement, and 59 percent are very or
somewhat confident they will have enough money to pay for long-term
care should they need it during retirement.
Moreover, poverty rates are higher for people approaching retirement and
people who are 75 and older. According to the Current Population
Survey, about 8 percent of people age 65-74 and 11 percent of those age
75-84 are in poverty, which is also the poverty rate for people age 55-64.
Twelve percent of people 85 and older are in poverty. 73 The
Supplemental Poverty Measure, an alternate poverty measure, found that
14 percent of people age 55-64 are in poverty according to this
72
GAO analysis based on data from the 2013 Survey of Consumer Finances. The margin
of error for 65-74 year olds is 3.2 percent with 95 percent certainty and for 55-64 year
olds, 2.2 percent with 95 percent certainty.
73
Considerable variation exists across demographic subgroups. A greater proportion of
blacks, Hispanics, and women over the age of 65 are in poverty as compared to other
groups.

definition. 74 For people 65-74, this number decreases to 12 percent, and
then increases for the oldest Americans: 17 percent for people between
75-84, and 20 percent for people 85 and older. Lastly, according to the
HRS, many retirees say that “not having enough income to get by” is a
concern, with 41 percent of retirees saying that this “bothers or worries”
them a lot. 75
While 23 percent of retirees report working for pay since they retired,
according to the 2015 EBRI study, the reasons people work in retirement
vary, including that they enjoy working (83 percent) and want to stay
active and involved (79 percent). Some other reasons include wanting
money to buy extras (54 percent), needing money to make ends meet (52
percent), a decrease in the value of their savings or investments (38
percent), or keeping health insurance or other benefits (34 percent). 76
74
The official poverty measure from the Current Population Survey is sometimes used to
determine eligibility for government programs and funding distributions. The Supplemental
Poverty Measure (SPM) is considered an experimental measure. The SPM serves as an
additional indicator of economic well-being and provides a deeper understanding of
economic conditions and policy effects. First published in 2011, it calculates poverty
thresholds using recent expenditures by families, including food, shelter, clothing, and
utilities, and is adjusted for differences in family size, geographic variation in living costs,
and homeownership. Unlike the official poverty measure, the SPM considers a family’s
resources after taxes and transfer programs. Medical out-of-pocket expenses are also
considered in the SPM, by being subtracted from a family’s resources. This means that
SPM values health insurance in how it reduces out-of-pocket medical costs, but it does
not account for the benefits of health insurance, such as access to medical providers or
reduced stress from having insurance.
75
Confidence intervals are between 32.8 percent and 48.9 percent with 95 percent certainty.
76
The reasons retirees report working for pay is from the 2014 EBRI Retirement
Confidence Survey, where 27 percent of retirees reported working for pay.

We provided a draft of this report to the Department of Labor, the
Agency Comments Department of the Treasury, and the Social Security Administration for
review and comment. The Department of Labor provided technical
comments, which we incorporated as appropriate. The Department of the
Treasury and the Social Security Administration did not have comments.
As agreed with your office, unless you publicly announce the contents of
this report earlier, we plan no further distribution until 30 days from the
report date. At that time, we will send copies of this report to the
Secretary of Labor, the Secretary of the Treasury, and the Commissioner
of Social Security, and other interested parties. In addition, the report will
be available at no charge on the GAO website at http://www.gao.gov.
If you or your staff have any questions about this report, please contact
me at (202) 512-7215 or jeszeckc@gao.gov. Contact points for our
Offices of Congressional Relations and Public Affairs may be found on
the last page of this report. GAO staff who made contributions to this
report are listed in appendix III.
Sincerely yours,
Charles A. Jeszeck
Director, Education, Workforce, and Income Security

Appendix I: Objectives, Scope, and
Methodology
Methodology
To analyze retirement savings and income for workers approaching

retirement and for those of retirement age, we answered the following
questions:
1. What financial resources do workers approaching retirement and

current retirees have?
2. What evidence do studies and surveys provide about retirement
security for workers and retirees?
Retirement Financial To describe the financial resources of near and current retirees, we
Resources examined financial information from the 2013 Survey of Consumer
Finances (SCF). The SCF is a triennial survey of household assets and
income from the Board of Governors of the Federal Reserve System
(Federal Reserve). The 2013 SCF surveyed 6,026 U.S. households about
their pensions, incomes, asset holdings and debts, and demographic
information. The SCF is conducted using a dual-frame sample design.
One part of the design is a standard, multistage area-probability design,
while the second part is a special over-sample of relatively wealthy
households. This is done in order to accurately capture financial
information about the population at large as well as characteristics
specific to the relatively wealthy. The two parts of the sample are adjusted
for sample nonresponse and combined using weights to make estimates
from the survey data representative of households overall. In addition, the
SCF excludes people included in the Forbes magazine list of the 400
wealthiest people in the United States. Furthermore, the 2013 SCF
dropped 11 observations from the public data set that had net worth at
least equal to the minimum level needed to qualify for the Forbes list.
We found the 2013 SCF to be reliable for the purposes of our report.
While the SCF is a widely used federal data source, we conducted an
assessment to ensure its reliability. Specifically, we reviewed related
documentation and internal controls, spoke with agency officials, and
conducted electronic testing. When we learned that particular estimates
were not reliable for our purposes–such as estimates of future DB
income–or had sample sizes too small to produce reliable estimates, we
did not use them.
Nonetheless, the SCF and other surveys that are based on self-reported
data are subject to nonsampling error, including the inability to get
information about all sample cases; difficulties of definition; differences in
the interpretation of questions; respondents’ inability or unwillingness to
provide correct information; and errors made in collecting, recording,

Methodology
coding, and processing data. These nonsampling errors can influence the
accuracy of information presented in the report, although the magnitude
of their effect is not known.
Estimates from the SCF are also subject to some sampling error since the
2013 SCF sample is one of a large number of random samples that might
have been drawn. Since each possible sample could have provided
different estimates, we express our confidence in the precision of the
sample results as 95 percent confidence intervals. These intervals would
contain the actual population values for 95 percent of the samples that
could have been drawn. In this report, we report percentage or other
numerical estimates along with their 95 percent confidence intervals.
Unless otherwise noted, all percentage estimates based on the SCF have
95 percent confidence intervals that are within 3 percentage points, and
all numerical estimates other than percentages have 95 percent
confidence intervals that are within 5 percent of the estimate itself. All
financial figures reported using SCF data are in 2013 dollars and most
are rounded to the nearest thousand dollars.
Where possible, we relied on variable definitions used for Federal

Reserve publications using the SCF. 1 For example, we used the Federal
Reserve’s variable for age, which is the age of the household head. 2 We
also used the Federal Reserve’s variable for retirement savings, which
included assets accrued in defined contribution (DC) plans such as 401(k)
plans as well as individual retirement accounts (IRA). 3 We do not include
the value of defined benefit (DB) plans, “traditional” pension plans that
provide benefits based on a formula and typically pay lifetime benefits as
an annuity unless a household has taken the benefit as a lump sum and
converted it into an IRA or other account balance. Retirement savings
also does not include savings held outside of a retirement account, which
is included in financial assets as non-retirement savings. Similarly, we
1
See Jesse Bricker, et al. “Changes in U.S. Family Finances from 2010 to 2013:
Evidence from the Survey of Consumer Finances,” Federal Reserve Bulletin, vol. 100, no.
4 (September 2014).
2
For purposes of data organization, the Federal Reserve considers the household head
to be the male within a mixed-sex couple and the older individual within a single-sex
couple.
3
This includes IRAs that have been rolled over, for example, from retirement savings
plans.

Methodology
used other Federal Reserve variables to describe additional resources

asked about in the SCF, such as home ownership, financial assets
(including savings in and outside of a retirement account), debt, and net
worth. This measure of net worth does not include the total value of
anticipated DB plan or Social Security benefits, in part because it is
difficult to determine the present value of these benefits. 4
An important exception to our use of Federal Reserve variables is our

estimation of household income: in order to separately estimate key
components of retirement income, such as Social Security and DB plans, 5
we developed our own variable for income while attempting to mirror the
Federal Reserve’s income variable as closely as possible. We consulted
with Federal Reserve staff to inform our calculations of Social Security
and DB plan income. One limitation to these income calculations is that
Social Security and DB plan income are for the respondent and his or her
spouse/partner for 2013, whereas other income is reported for the entire
family for 2012. However, we believe the estimates are reliable for our
purposes. For example, 88 percent of households age 65 and older
consist only of the respondent and his or her spouse/partner. Further, we
conducted electronic testing and found no statistically significant
difference between estimates of income using our variables and the
Federal Reserve’s variables, either in aggregate or by various age
groups. When describing the average share of household income from a
particular source, we divided for each household the amount from that
source by the household’s total income, and reported the average across
all households. 6
To provide context to retirement savings amounts, we calculated annuity

equivalents using the Thrift Savings Plan retirement calculator. This
provides information on the approximate amount of monthly lifetime
income participants in the Thrift Savings Plan could receive if they used
their retirement savings to purchase an inflation-protected annuity through
4
While we do include DB plan and Social Security benefits in retirement income, we
include DB plan benefits in retirement savings only if a household has taken the benefit as
a lump sum and rolled it into an IRA or other account balance.
5
Income from DB plans includes traditional pensions with lifetime benefits and annuitized
DC plans. In 2011, we found that few retirees with DC plans chose or purchased an
annuity (GAO-11-400).
6
We conducted this calculation for households with positive, non-zero income.

Methodology
the plan. 7 The Thrift Savings Plan offers an annuity with monthly
payments that increase each year up to 3 percent, based on inflation.
Annuities purchased through other channels may provide different levels
of lifetime income. If a household purchased an annuity without inflation
protection, the initial amount of income would be higher. Similarly,
different assumptions about the interest rate would change the annuity
amount. For example, the calculator currently uses an interest rate of two
percent as of the calculation date, though a higher interest rate would
increase the annuity amount.
Defining retirement for Americans is not without difficulty, as retirement is

a nebulous concept and different people may define retirement for
themselves differently. Self-defined retirees may work or not claim Social
Security benefits, while people who do not identify as retired may claim
Social Security benefits or not work. For the purpose of this report, we
discuss households and workers nearing retirement age as 55-64 to
isolate near retirees and determine retirement readiness, though some of
this group may in fact be retired. We discuss the age group 65-74 to
examine retirees in the first stage of retirement, although some members
of this group may not be retired. Finally, we discuss the age group 75 and
older, most of whom we expect to be retired.
Studies and Surveys on To analyze other evidence of retirement security, we reviewed several
Retirement Security studies of retirement adequacy and compared and contrasted their
methodologies and findings. These included academic studies based on
formal models of optimal saving behavior and consumption patterns,
those that projected savings levels in retirement based on recent savings
data, and other reports examining the levels, adequacy, and sources of
retirement wealth. We selected savings projections models that we had
familiarity with from past GAO reports, and chose other studies and
reports based on recommendations from internal and outside
stakeholders. We also interviewed authors of studies and other retirement
experts about retirement readiness.
We also reviewed survey questions of retirees and workers approaching

retirement age to infer information about their experiences of saving for
7
While we reported rounded savings amounts, we based the annuity equivalent estimates
off of non-rounded amounts.

Methodology
and living in retirement. These surveys asked questions regarding

financial well-being, confidence in being able to afford a comfortable
retirement, and expectations of when and how people plan to retire
contrasted with the actual experiences of current retirees. We analyzed
the most recent available data from all of the surveys used as of April
2015.
The University of Michigan’s Health and Retirement Study (HRS) is a

longitudinal panel study that surveys a representative sample of
approximately 26,000 Americans over the age of 50 every 2 years, with
new cohorts being added to the sample every 6 years. The HRS also
includes off-year studies to cover specific topics, like consumption, in
depth. GAO used data from the 2012 core survey. As with all survey data,
some statistical imprecision exists in the data that are presented in this
report.
The Federal Reserve’s 2013 Survey of Household Economics and

Decisionmaking is a first-time survey conducted by the Federal Reserve
to better understand the financial state of U.S. households. The survey
was conducted by the Board’s Division of Consumer and Community
Affairs in September 2013 using a nationally representative online survey
panel. The survey was administered by GfK, an online consumer
research company. It created a nationally representative probability-
based sample by selecting respondents, adults 18 years and older, based
on both random digit dialing and address-based sampling. A total of 4,134
surveys were fully completed. The data are weighted using the variables
of gender, age, race/ethnicity, education, census region, residence in a
metropolitan area, and access to the Internet. Demographic weighting
targets are based on the Current Population Survey. As with all survey
data, some statistical imprecision exists in the data that are presented in
this report.
Gallup conducts daily tracking of public opinion through the Gallup U.S.
Daily. For the Gallup U.S. Daily, Gallup samples 3,500 respondents a
week, 15,000 a month, and 175,000 a year. Surveys are conducted
among U.S. adults ages 18 and older, using both landline and cell phone
numbers. Each sample of national adults includes a minimum quota of 50
percent cell phone respondents and 50 percent landline respondents. The
data are weighted by gender, age, race, Hispanic ethnicity, education,
region, population density, and phone status. Demographic weighting
targets are based on the Current Population Survey. Gallup samples
landline and cell phone numbers using random-digit-dial methods. The
results we reported on are based on the sub-sample of baby boomers, or

Methodology
1,929 adults born from 1946 through 1964. The margin of sampling error
is plus or minus 4 percentage points at the 95 percent confidence level.
The 2015 Retirement Confidence Survey, conducted by the Employee

Benefit Research Institute (EBRI) and Greenwald & Associates, is an
annual survey on the views and attitudes of working-age and retired
Americans regarding retirement, their preparations for retirement, their
confidence with regard to various aspects of retirement, and related
issues. The survey was conducted in January and February 2015 through
20-minute telephone interviews with 2,004 individuals (1,003 workers and
1,001 retirees) age 25 and older in the United States. Random-digit
dialing was used to obtain a representative sample, as well as a cell
phone supplement. All data are weighted by age, sex, and education to
reflect the actual proportions in the adult population. The weighted
samples of workers and retirees yield a statistical precision of plus or
minus 3.5 percentage points, with 95 percent certainty, of what the results
would be if all Americans age 25 and older were surveyed with complete
accuracy.
The 2013 Risks and Process of Retirement Survey, sponsored by the

Society of Actuaries and prepared by Greenwald & Associates, is a
survey intended to provide insights into how Americans decide to retire,
how they perceive post-retirement risks, and how they manage financial
resources in retirement. The survey was conducted online among
Americans age 45-80 and included both pre-retirees and retirees at all
income levels. A total of 2,000 interviews, half among pre-retirees and
half among retirees, lasting an average of 20 minutes, were conducted
using Research Now’s online consumer panel from August 19-28, 2013.
The sample data are weighted by age, sex, and census region to the
2012 population estimates released by the Census Bureau. As with all
survey data, some statistical imprecision exists in the data that are
presented in this report.
The official poverty rates and Supplemental Poverty Measures that we

report come from the Census Bureau. The official poverty rate is
sometimes used to determine eligibility for government programs and
funding distributions. The Supplemental Poverty Measure is considered
an experimental measure and serves as an additional indicator of
economic well-being and provides a deeper understanding of economic
conditions and policy effects. We reported on the poverty rates for older
Americans, to indicate financial well-being.

Methodology
For all survey data used in this report, we reviewed methodological

documentation and, when appropriate, interviewed individuals
knowledgeable about the data and conducted electronic testing. Based
on this, we found the data to be reliable for the purposes used in this
report.

Appendix II: List of Selected Studies of
Appendix II: List of Selected Studies of
Retirement Income Adequacy
Retirement Income Adequacy
Aon Hewitt, “The Real Deal: 2012 Retirement Income Adequacy at Large
Companies – Highlights,” (2012), accessed April 8, 2015,
http://www.aon.com/human-capital-consulting/thought-
leadership/retirement/survey_2012_the-real-deal.jsp.
Biggs, Andrew G. and Sylvester Schieber, “Is There a Retirement Crisis?”

National Affairs, no. 20 (Summer 2014): 55-75.
Brady, Peter, Kimberly Burham, and Sarah Holden. The Success of the
U.S. Retirement System. Investment Company Institute. Washington,
D.C.: December 2012.
Favreault, Melissa M., Richard W. Johnson, Karen E. Smith, and Sheila

R. Zedlewski, “Boomers’ Retirement Income Prospects.” Urban Institute.
Brief no. 34 (February 2012).
Hurd, Michael D. and Susan Rohwedder, “Economic Preparation for

Retirement.” Investigations in the Economics of Aging, ed. David A. Wise.
Chicago: University of Chicago Press (May 2012), 77-113.
Munnell, Alicia H., Wengliang Hou, and Anthony Webb, “NRRI Update
Shows Half Still Falling Short.” Center for Retirement Research at Boston
College, Number 14-20. (December 2014).
Rhee, Nari and Ilana Boivie, “The Continuing Retirement Savings Crisis.”
National Institute on Retirement Security. Washington, D.C.: March 2015.
Scholz, John Karl, Ananth Seshadri, and Surachai Khitatrakun, “Are

Americans Saving ‘Optimally’ for Retirement?” Journal of Political
Economy. vol. 114, no. 4. (2006): 607-643.
VanDerhei, Jack, “Retirement Income Adequacy for Boomers and Gen

Xers: Evidence from the 2012 EBRI Retirement Security Projection
Model.” Employee Benefit Research Institute, Notes, vol. 33, no. 5 (May
2012).

Appendix III: GAO Contact and Staff
Appendix III: GAO Contact and Staff
Acknowledgments
Acknowledgments
Charles A. Jeszeck, (202) 512-7215 or jeszeckc@gao.gov

GAO Contact
Michael Collins (Assistant Director), Mark Glickman, Shilpa Grover, and
Staff Laura Hoffrey made key contributions to this report. In addition, support
Acknowledgments was provided by James Bennett, Mitchell Karpman, Kathy Leslie, Sheila
McCoy, Susan E. Offutt (GAO Chief Economist), Mark Ramage, Joseph
Silvestri, Frank Todisco (GAO Chief Actuary), Walter Vance, Charles
Willson, and Craig Winslow.

Related GAO Products
Related GAO Products
Private Pensions: Participants Need Better Information When Offered

Lump Sums That Replace Their Lifetime Benefits, GAO-15-74.
Washington, D.C.: January 27, 2015.
Retirement Security: Challenges for Those Claiming Social Security

Benefits Early and New Health Coverage Options, GAO-14-311.
Washington, D.C.: April 23, 2014.
Retirement Security: Trends in Marriage and Work Patterns May Increase

Economic Vulnerability for Some Retirees, GAO-14-33. Washington,
D.C.: January 15, 2014.
401(k) Plans: Other Countries’ Experiences Offer Lessons in Policies and

Oversight of Spend-down Options, GAO-14-9. Washington, D.C.:
November 20, 2013.
Automatic IRAs: Lower-Earning Households Could Realize Increases in

Retirement Income, GAO-13-699. Washington, D.C.: August 23, 2013.
401(k) Plans: Labor and IRS Could Improve the Rollover Process for
Participants, GAO-13-30. Washington, D.C.: March 7, 2013.
Retirement Security: Annuities with Guaranteed Lifetime Withdrawals

Have Both Benefits and Risks, but Regulation Varies across States,
GAO-13-75. Washington, D.C.: December 10, 2012.
Retirement Security: Women Still Face Challenges, GAO-12-699.

Washington, D.C.: July 19, 2012.
Unemployed Older Workers: Many Experience Challenges Regaining

Employment and Face Reduced Retirement Security, GAO-12-445.
Washington, D.C.: April 25, 2012.
Retirement Income: Ensuring Income throughout Retirement Requires

Difficult Choices, GAO-11-400. Washington, D.C.: June 7, 2011.
Private Pensions: Some Key Features Lead to an Uneven Distribution of

Benefits, GAO-11-333. Washington, D.C.: March 30, 2011.
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Retirement Security Most Households Approaching Retirement Have Low Savings

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Retirement Security Most Households Approaching Retirement Have Low Savings

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United States Government Accountability Office

Report to the Ranking Member,

Why GAO Did This Study What GAO Found

United States Government Accountability Office

Appendix I Objectives, Scope, and Methodology 37

Appendix II List of Selected Studies of Retirement Income Adequacy 44

Appendix III GAO Contact and Staff Acknowledgments 45

Related GAO Products 46

Page i GAO-15-419 Retirement Savings

Page ii GAO-15-419 Retirement Savings

441 G St. N.W.

May 12, 2015

The Honorable Bernard Sanders

Dear Senator Sanders:

Page 1 GAO-15-419 Retirement Savings

To describe the financial resources of current and future retirees, we

To analyze other evidence of retirement security, we reviewed several

Page 2 GAO-15-419 Retirement Savings

For the purpose of this report, we discuss households and workers

We conducted this performance audit from April, 2014 to May, 2015 in

(1) Social Security: Social Security pays benefits to retirees, their

Page 3 GAO-15-419 Retirement Savings

(2) Defined Benefit Plans: these plans are “traditional” employment-based

Page 4 GAO-15-419 Retirement Savings

Workers and employers who contribute to retirement savings accounts

Page 5 GAO-15-419 Retirement Savings

Employment-based retirement plan coverage, especially in the private

Page 6 GAO-15-419 Retirement Savings

According to our analysis of data from the 2013 SCF, 52 percent of

Page 7 GAO-15-419 Retirement Savings

Page 8 GAO-15-419 Retirement Savings

Page 9 GAO-15-419 Retirement Savings

Table 1: Select Resources for Households Age 55-64 by Ownership of Retirement

Dollar figures rounded to nearest $1,000

Page 10 GAO-15-419 Retirement Savings

Page 11 GAO-15-419 Retirement Savings

10th 25th 50th 75th 90th

Dollar figures rounded to nearest $1,000

Page 12 GAO-15-419 Retirement Savings

Page 13 GAO-15-419 Retirement Savings

Dollar figures rounded to nearest $1,000

Page 14 GAO-15-419 Retirement Savings

Table 5: Distribution of Retirement Savings Amounts among Households with

10th 25th 50th 75th 90th

Page 15 GAO-15-419 Retirement Savings

Among households age 65-74, the prevalence of both retirement savings

Table 6: Select Retirement Resources for Households Age 65 to 74 by Income

Dollar figures rounded to nearest $1,000

Page 16 GAO-15-419 Retirement Savings

Social Security makes up a larger share of household income for

Page 17 GAO-15-419 Retirement Savings

Households age 65-74 with no retirement savings or DB plan have about

Page 18 GAO-15-419 Retirement Savings

Social Security provides the bulk (on average 61 percent) of household

Page 19 GAO-15-419 Retirement Savings

Figure 4: Average Composition of Income for Households Age 75 and Older

Page 20 GAO-15-419 Retirement Savings

Similarly, households age 75 and older with no retirement savings have

Page 21 GAO-15-419 Retirement Savings

Page 22 GAO-15-419 Retirement Savings

Several studies have attempted to evaluate the adequacy of retirement

The Employee Benefit Research Institute (EBRI) uses its Retirement

Page 23 GAO-15-419 Retirement Savings